Rudyk v. Halton Region Conservation Authority, 2022 ONSC 518

CITATION: Rudyk v. Halton Region Conservation Authority, 2022 ONSC 518

DIVISIONAL COURT FILE NO.: 779/21

DATE: 20220126

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

McWatt ACJ SCJ, Kristjanson and Favreau JJ.

BETWEEN:

Ivan Rudyk and Shelley Young

Applicants

– and –

Halton Region Conservation Authority

Respondent

Arkadi Bouchelev, for the Applicants

Kenneth Jull and Eliane Leal da Silva, for the Respondent

HEARD at Toronto (by videoconference): December 15, 2021

Favreau J.

Overview

1The applicants, Ivan Rudyk and Shelley Young, seek an order quashing a decision made by the respondent, Halton Region Conservation Authority (the “Authority”), voiding a permit that would have allowed them to build an addition on their house. The applicants also seek extensive declaratory relief that would allow them to proceed with the project without further interference from the Authority.

2I am satisfied that the applicants are entitled to an order quashing the Authority’s decision. Section 8 of O. Reg. 162/06, which gives the Authority the power to cancel a permit, provides that permit holders are entitled to notice and a show cause hearing before a permit can be cancelled. The Regulation does not give the Authority the power to declare a permit “void” without a hearing. The Authority’s decision voiding the permit was both unreasonable and procedurally unfair. However, as discussed more fully below, it would not be appropriate for this Court to grant the broad declaratory relief sought by the applicants.

Statutory and regulatory authority of the Authority

3Before reviewing the background to the dispute between the parties, it is helpful to understand the Authority’s statutory and regulatory powers.

4The Conservation Authorities Act, R.S.O. 1990, c. C.27, provides for the establishment of conservation authorities in municipalities in Ontario. Section 28(1) of the Act gives conservation authorities the power to establish regulations addressing various matters, including “prohibiting, regulating or requiring the permission of the authority for development if, in the opinion of the authority, the control of flooding, erosion, dynamic beaches or pollution or the conservation of land may be affected by the development”.

5Section 28(25) of the Act defines “development”, which includes:

(a) the construction, reconstruction, erection or placing of a building or structure of any kind,

(b) any change to a building or structure that would have the effect of altering the use or potential use of the building or structure, increasing the size of the building or structure or increasing the number of dwelling units in the building or structure…

6In this case, the relevant regulation is O. Reg. 162/06, titled Halton Conservation Authority: Regulation of Development, Interference with Wetlands and Alterations to Shorelands and Watercourses.

7Section 2(1) of O. Reg. 162/06 prohibits developments in areas that may be affected by various events, including “erosion”.

8Section 3(1) of O. Reg. 162/02 gives the Authority the power to grant permission for development in the areas restricted by section 2(1), where the Authority is of the “opinion, the control of flooding erosion, dynamic beaches, pollution or the conservation of land will not be affected by the development”. Subsection (2) requires the Authority to give the permission in writing and subsection (4) provides that the Authority can designate one of more employees to exercise the powers under subsection (1).

9Section 8 of O. Reg. 162/02 addresses the cancellation of permits given under section 3(1), and requires notice and a show cause hearing:

8. (1) The Authority may cancel a permission granted under section 3 or 6 if it is of the opinion that the conditions of the permission have not been met.

(2) Before cancelling a permission, the Authority shall give a notice of intent to cancel to the holder of the permission indicating that the permission will be cancelled unless the holder shows cause at a hearing why the permission should not be cancelled.

(3) Following the giving of the notice under subsection (2), the Authority shall give the holder at least five days notice of the date of the hearing.

Background

The applicants’ construction project

10The applicants own a bungalow, built in 1957, that backs onto a ravine in Burlington.

11The applicants decided to renovate their house, in part to make it more accessible for Ms. Young, who has health issues due to a car accident.

12The applicants hired Lifestyles by Barons (“Lifestyles”) to renovate their house. In turn, Lifestyles retained Empire Design Company (“Empire”) to prepare design drawings. As part of their contracts, Lifestyles and Empire were to apply for the necessary permits and approvals, including a minor variance from the City of Burlington’s Committee, a building permit from the City of Burlington and a development permit from the Authority.

13Empire submitted the application for the development permit to the Authority in early May 2018. The application form described the project as a “2-storey addition to the side yard” and was categorized as an “alteration/addition to existing structure”. With the application, Empire submitted a survey that labelled the bungalow as a “1 Storey Brick Dwelling”. The Authority did not ask for drawings at the time of the application. However, one of the Authority’s staff members visited the site before the permit was approved.

14The Authority issued the permit to the applicants on May 28, 2018. The permit was for a “proposed 2-storey addition, rear balcony, covered front porch and on-grade patio”. The cover letter stated that the Authority had to approve any changes to the approved design.

15The applicants also obtained the other necessary approvals, including a building permit issued by the City of Burlington on November 1, 2018.

16In January 2019, Lifestyles began demolition work. The south and east walls were not meant to be part of the demolition. However, both walls partially collapsed when the roof to the building was removed.

17After the partial collapse of the two walls, an engineering firm retained by the applicants determined that the building was structurally unsound. Lifestyles demolished the remaining parts of the walls and rebuilt them in the same locations with new materials. The City of Burlington inspected and approved the rebuilt walls.

18On March 15, 2019, the Authority communicated with the City of Burlington stating that the Authority had not approved the work on the house. On March 20, 2019, the City issued a stop-work order and an order to comply to the applicants.

19On March 26, 2019, the Authority issued a Notice of Violation to the applicants. The Notice stated that the applicant had not obtained permissions to undertake “the full demolition and/or construction of an entire dwelling” and that they were in violation of section 2 of O. Reg. 162/06. The Notice encouraged the applicants to enter into a compliance agreement, including by obtaining a geotechnical assessment showing compliance with the Authority’s Policy.

20On May 17, 2019, the City of Burlington lifted the stop work order and order to comply on the basis that the work had been required because the structure was unsafe. The City also stated that the applicants could commence construction work in compliance with their permits.

21The applicants resumed work on the house.

22However, on August 22, 2019, the Authority sent a letter to the applicants notifying them that the development permit it had issued was “void”. The Authority provided the following rationale for its decision:

The subject property is located within the erosion hazard associated with the valley of Grindstone Creek. It is also in an area with known slope instability issues. Given that the scale/scope of works has changed from what was originally permitted, a geotechnical assessment is required to ensure that the long-term stability of the valley wall is maintained and that there is no risk to life or property damage.

CH issued Permit #5927, on May 28, 2018, for the construction of a minor addition to the existing dwelling (specifically an expansion of the existing single car garage with living space above), a rear balcony, covered front porch and on-grade patio. However, since CH issued that permit, the existing dwelling was completely demolished and a new dwelling is now under construction. Consequently, the works occurring onsite are beyond the scope of what was approved under Permit #5927. The scale and scope of works currently underway would have required additional supporting information (i.e., geotechnical assessment). Accordingly, Permit #5927 is void, as it s not possible to permit an addition to a building that no longer exists.

23In its decision letter, the Authority referred to the process in section 8 of O. Reg. 162/06 for cancelling a permit. However, the Authority stated “[i]n our view, given that the permit is void, a hearing is not warranted, as the circumstances that were set out in the application for the permit have fundamentally changed”.

24The letter also requested that the applicants enter into a “compliance agreement” and that they pay a fee of $3,200 “with a 100% surcharge”.

25The evidence from cross-examinations of the Authority’s affiant is that the decision to “void” the permit was not made or approved by the Authority’s Board. Rather, it was made by Authority employees.

26On September 23, 2019, the City of Burlington issued a stop work order to the applicants, requiring them to obtain approval from the Authority before proceeding any further with the work.

27In December 2019 and July 2020, the Authority sent “with prejudice” communications to the applicants, inviting them to submit a development permit application for a “new dwelling”.

Proceedings in the Superior Court

28The applicants initially brought an application in the Superior Court seeking extensive declaratory relief, including declarations that its construction project was not a “development” for the purpose of the Conservations Authorities Act and O. Reg. 162/06. In the alternative to the substantive declaratory relief sought, the applicants asked for a declaration that the voiding of the permit was ultra vires because the Authority failed to comply with the process in s. 8 of O. Reg. 162/06.

29For the purpose of the application, the parties prepared extensive affidavit evidence, including expert reports, and conducted cross-examinations.

30In a decision dated August 23, 2021, Sharma J. transferred the matter to the Divisional Court to be heard as an application for judicial review. He explained the basis for this decision as follows:

[The] factual allegations, as well as the legal issues on which the applicants seek orders, challenge the exercise of statutory power and decision-making by the respondent conferred upon it under the Act and O. Reg. 162/06. The declarations sought by the applicants call into question the authority of the respondent to regulate matters which the applicants say is not “development”, as well as the exercise of the respondent’s authority to cancel or void a permit previously issued. Whether that authority exists and whether it was exercised properly is what this entire application is about.

It is therefore a judicial review application challenging a statutory power or statutory power of decision. Section 2(1)2 of the JRPA, states that the court may, on an application for judicial review, grant relief by way of a declaration “in relation to the exercise, refusal to exercise or proposed exercise of a statutory power.” The court may also set aside a decision for error of law (s.2(2)), or where a decision is unauthorized or invalid (s.2(4)). These are the types of remedies the applicants seek. Section 6(1) of the JRPA, however, states that judicial review applications are to be made to the Divisional Court.

31As part of his decision, Sharma J. left the issue of costs of the application to the Divisional Court in the context of the application for judicial review

Other litigation

32The Authority has brought charges against the applicants under the Provincial Offences Act, R.S.O. 1990, c. P.33. In that context, the Authority obtained a search warrant in relation to the work on the property.

33On March 19, 2021, the applicants commenced a civil action against Lifestyles, Empire and others, seeking damages for negligence. In the statement of claim, the applicants allege that the plaintiffs misrepresented the nature of the project to the Authority.

Issues and analysis

34The applicants argue that the Authority has no jurisdiction over the work on their house other than the garage. They claim that the work they plan to do is on the existing footprint of the building and that this work thereby does not constitute a “development” as defined in the Conservation Authorities Act. They seek broad declaratory relief arising from this argument that would essentially allow them to proceed with the work without further interference by the Authority. In the alternative, the applicants challenge the Authority’s decision to “void” their development permit on the basis that the Authority did not have the jurisdiction to cancel the permit without following the process in section 8 of O. Reg. 162/06.

35For its part, the Authority argues that the application for judicial review should be dismissed on the basis that it is premature and/or moot, or on the basis that the applicants’ initial permit application was a “sham”. Essentially, these arguments turn on the Authority’s position that the project it approved is fundamentally different from the project the applicants are executing and the applicants therefore need a new permit to proceed with the project. From this perspective, the Authority argues that the application for judicial review has no utility because the crux of the issues between the parties is whether the applicants will be entitled to a development permit for their new project.

36In my view, the broad declaratory relief sought by the applicants is an overreach. It is not the role of the Divisional Court on an application for judicial review to grant broad declarations regarding the rights of a party under a statute. Rather, the Court reviews the decision of an administrative decision maker to determine whether the decision was reasonable and/or procedurally fair. The relief available flows from that determination. Accordingly, the role of the Court on this application for judicial review is to determine whether the decision of the Authority voiding the permit was unreasonable or procedurally unfair and, if so, what remedy to grant in the circumstances. As set out below, in my view, the Authority’s decision was both unreasonable and procedurally unfair. The appropriate remedy is to quash the decision. This means that the permit remains valid, but the Authority is not precluded from following the process set out in section 8 of O. Reg. 162/06 to give notice to the applicants that it intends to cancel the permit and to hold a show cause hearing.

37Insofar as the issues raised by the Authority are concerned, in my view they have no merit. They all presuppose that the Authority was entitled to “void” the development permit. However, as reviewed below, the Authority was not entitled to do so without following the process in section 8 of O. Reg. 162/06.

38Based on the issues as described above, the analysis below is organized as follows:

a. Standard of review;

b. Whether the decision to void the permit was unreasonable;

c. Whether the decision to void the permit was procedurally unfair;

d. Whether the application for judicial review should be dismissed on the basis that it is moot, premature and/or based on a sham; and

e. The appropriate remedy.

Standard of review

39The standard of review to be applied to the substance of the Authority’s decision is reasonableness: Laforme v. The Corporation of the Town of Bruce Peninsula, 2021 ONSC 5287 at paras. 18-19.

40In accordance with the Supreme Court of Canada’s decision in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, at paras. 99-101, the principles to be applied in deciding whether a decision is reasonable include the following:

a. Reasonableness is concerned with justification, transparency and intelligibility. A decision is unreasonable if it is internally incoherent or if it is untenable having regard to the relevant factual and legal constraints.

b. The party challenging the decision has the burden of showing that it is unreasonable. A court should not set aside a decision based on minor flaws or peripheral shortcomings. To justify a finding of unreasonableness, the flaws or shortcomings must be sufficiently central or significant to the merits of the decision.

c. The role of the court is to review the decision and not to decide the issue afresh. The focus of the reasonableness inquiry is therefore on the decision-making process and the outcome.

41There is no standard of review to be applied to the issue of procedural fairness. Rather, the Court is to determine whether the decision was procedurally fair having regard to the factors in Baker v. Canada (Minister of Citizenship and Immigration), 1999 699 (SCC), [1999] 2 SCR 817.

The Authority’s decision to “void” the permit was not reasonable

42The Authority’s decision to “void” the permit was not reasonable because it had no authority to cancel a development permit without following the process set out in section 8 of O. Reg. 162/06.

43In Vavilov, at para. 101, the Supreme Court held that one of the potential “fundamental flaws” in an administrative decision that would justify a court’s intervention is where the decision is “untenable in light of the … legal restraints that bear on it”. Again, at para. 108, the Court emphasized that administrative decision makers are constrained by their constituting statutes and that any exercise of discretion “must ultimately comply ‘with the rationale and purview of the statutory scheme under which it is adopted.’”

44In this case, section 8 of O. Reg. 162/06 sets out the process for the Authority to cancel a development permit. It requires the Authority to give notice to the permit holder and to hold a show cause hearing. There is no provision in the Conservation Authorities Act or O. Reg. 162/06 that allows the Authority to “void” a permit without following this process. The Authority’s use of the word “void” is merely a matter of semantics. What the Authority did was cancel the applicant’s permit. In doing so, it was required to follow the process set out in the regulation.

45Another fundamental flaw in the Authority’s decision to cancel the permit without notice and a show cause hearing is that the O. Reg. 162/06 suggests that this is a decision that cannot be made by the Authority’s staff but that must be made by the Authority’s Board. Section 3(4) of O. Reg. 162/06 gives the Authority the ability to delegate to its employees the power to grant a permit. However, there is no such delegation in section 8 of O. Reg. 162/06. In this case, the decision was made by Authority staff members who, on the face of the regulation, did not have the authority to make such a decision.

46The Authority justified its decision to “void” the permit and forego the process set out in section 8 of O. Reg 162/06 on the basis that the applicants were building a new structure and “the circumstances that were set out in the application for the permit have fundamentally changed”. However, it is evident from the record and issues before us that there is a significant dispute between the parties about the scope of the original permit, and specifically the extent to which it allowed the applicants to add a second floor to parts of the building. The effect of the collapsed walls is an added complication that raises issues about whether rebuilding those walls amounts to a change in the scope of work that may justify canceling a permit pursuant to section 8(1) of O. Reg. 162/06. However, these are precisely the types of issues that should be addressed and resolved at a show cause hearing. The applicants should have an opportunity to put their evidence and arguments before the proper decision makers, after which the Authority can decide whether the permit should be cancelled or not.

47Through their extensive records, including expert evidence, the parties seemed to invite this Court to resolve the issue of whether the work on the building exceeded the scope of the original permit. I address this point more fully in the section dealing with remedy, however I wish to emphasize again that this is not the proper role of the Divisional Court on an application for judicial review. An application for judicial review is to be decided on the record before the original decision maker. Much of the parties’ evidence was developed for the application in the Superior Court and, ultimately, before this Court. The evidence may ultimately be relevant at a show cause hearing. But it is not the role of this Court to step into the shoes of the show cause decision makers, which are presumably members of the Authority’s Board, to make the decision they should have made if the proper process had been followed.

The Authority’s decision to “void” the permit was procedurally unfair

48The Authority’s decision to “void” the permit was procedurally unfair because the Authority did not follow the requirements in section 8 of O. Reg. 162/06 and because it did not follow the basic requirements of procedural fairness for cancelling a permit.

49As held in Vavilov, at para. 77, the content of the duty of procedural fairness is to be determined in accordance with the factors established by the Supreme Court in Baker. Those factors include “(1) the nature of the decision being made and the process followed in making it; (2) the nature of the statutory scheme; (3) the importance of the decision to the individual or individuals affected; (4) the legitimate expectations of the person challenging the decision; and (5) the choices of procedure made by the administrative decision maker itself”.

50In this case, as mentioned above, the regulatory scheme provided for notice and a show cause hearing. The Authority did not provide these procedural guardrails and the decision was procedurally unfair on that basis alone.

51In addition, in my view, even in the absence of such regulatory requirements, the Authority was still required to give the applicants notice and an opportunity to be heard. The applicants obtained a permit from the Authority to renovate their home. They embarked on the work and the authority cancelled their permit mid-work without notice and without an opportunity to be heard. The Authority’s decision had a significant impact on the applicants’ interests, including their financial interests. This is the type of decision that warrants at least some procedural safeguards. In this case, the Authority did not afford the applicants any such safeguards.

The application for judicial review should not be dismissed on the basis of prematurity or mootness or that the original application for a permit was a sham

52The Authority’s arguments that the application for judicial review should be dismissed on these preliminary issues have no merit because they assume that the Authority was justified in declaring that the permit was “void”.

53The doctrine of prematurity provides that, absent exceptional circumstances, on an application for judicial review, the Court should not intervene until the administrative proceedings have fully run their course: Volochay v. College of Massage Therapists of Ontario, 2012 ONCA 541. In this case, the Authority takes the position that, because the applicants are required to apply for a new permit given the change in the scope of work, it is premature for this Court to decide whether the Authority’s decision was reasonable or procedurally unfair. This argument misconceives the doctrine of prematurity and the nature of the mischief in this case. As far as the applicants are concerned, the administrative proceedings are complete. They had a permit. The permit was voided without giving them an opportunity to participate in a show cause hearing. The Authority’s position that the applicants can and should apply for a new permit assumes that the voiding of the original permit was justified. It was not justified in the absence of a show cause hearing. The doctrine of prematurity therefore has no application.

54The doctrine of mootness provides that, absent issues that engage the public interest, the court should not decide an issue that is no longer live between the parties: Borowski v. Canada, 1989 123 (SCC), [1989] 1 S.C.R. 342. In this case, the Authority takes the position that the validity of the original permit is moot given the change in the scope of work. Again, the issue of whether there has been a change in the scope of work that would justify cancelling the permit is at the heart of the dispute between the parties. It is an issue that should have been decided at a show cause hearing. There is therefore no basis for dismissing the application for judicial review as moot.

55Finally, the Authority argues that the application for judicial review should be dismissed because the original application for a permit was a sham. The Authority argues that the permit was a sham because the applicants misrepresented the scope of the work they intended to do. Essentially, the Authority argues that, because judicial review is discretionary, the Court should decline to grant a remedy that would reward the applicants’ alleged dishonesty. This argument again relies on the Authority’s position that there is a difference between the scope of work represented in the permit application and the actual work the applicants have performed and intend to perform. As already stated, this is at the heart of the dispute between the parties. Based on the record before the Court, it is far from obvious that the original permit application was a sham. There are several references to a two-storey addition and the precise scope of the work is evident from drawings provided to the Authority a few months after it issued the permit. There is no merit to the Authority’s argument that the application should be dismissed on the basis that the original permit application was a sham.

56Ultimately, the Authority’s arguments reviewed above highlight the misguided manner in which the Authority has dealt with the issues in this case. Section 8 of O. Reg. 162/06 provides a clear process for deciding whether a development permit should be cancelled on the basis that a permit holder has not complied with a condition in the permit. Rather than complying with this requirement, the Authority has persisted in avoiding this process by taking the position that the scope of work undertaken by the applicants was different from what they applied for. However, this is precisely the issue a show cause hearing is meant to address. Unfortunately, the Authority’s persistent failure to abide by its procedural obligations has imposed significant costs and delays on all parties.

Appropriate remedy

57In my view, the appropriate remedy in this case is to quash the Authority’s decision. This means that the development permit originally issued by the Authority remains valid. It will be up to the Authority to decide whether to seek to cancel the permit and, if so, to do so in accordance with the procedure set out in section 8 of the O. Reg. 162/06.

58As indicated above, both sides appear to invite this Court to decide whether the permit should be cancelled. The applicants argue that the work at issue is not a “development” within the meaning of the Conservation Authorities Act or that, even if it is, it falls within the scope of the original permit. They ask this Court to make declarations that would allow them to continue with the work without further interference from the Authority. For its part, as indicated above, the Authority seems to argue that it is self-evident that the work at issue is a development and that it is not within the scope of the original permit.

59In Vavilov, at para. 142, the Supreme Court stated that, as a general rule, courts should “respect the legislature’s intention to entrust the matter to the administrative decision maker”. The Court noted a few exceptions where it may be appropriate for courts to decide the issue; for example, where the result is inevitable or where there has been significant delay or there is urgency. In this case, the outcome is not inevitable. For example, the applicants have legitimate arguments regarding the original scope of the permit and the Authority may have legitimate concerns regarding whether the walls collapsing changed the scope of the work such that the permit should be cancelled and the applicants should be required to apply for a new permit. The parties’ evidence and their arguments should form part of the record on a show cause hearing. This Court should not decide these issues as a matter of first impression.

60I appreciate that, from the applicants’ perspective, there has been extensive delay in this matter. However, this is not sufficient to justify having this Court essentially conduct the show cause hearing. In addition, while most of the blame for the delay can be laid at the Authority’s feet for consistently seeking to defend its position that it had authority to “void” the permit without a show cause hearing, some of the delay is also attributable to the applicants for seeking to challenge the Authority’s decision through an application for declaratory relief rather than through an application for judicial review. This outcome may cause further delay if the Authority chooses to pursue the cancellation of the permit. However, it will ensure that the decision is made following the proper process by decision-makers who have been entrusted by the legislature to decide the issues.

Costs

61As the successful parties, the applicants are entitled to their costs. The applicants seek costs on a partial indemnity basis in the amount of $117, 482.87, all inclusive. This amount is far higher than the costs typically awarded by the Divisional Court for a hearing of this nature. However, if the respondents had been successful, they would have sought costs in the amount of $289.417.59, which is close to three times the amount sought by the applicants.

62In my view costs of $100,000, all inclusive, to the applicants is reasonable in the circumstances of this case. This amount accounts for the fact that the Authority was successful in its motion to move the application from the Superior Court to the Divisional Court, but nevertheless recognizes that the applicants have incurred significant costs due to Authority’s failure to follow the process mandated by its own regulation.

Conclusion

63For the reasons above, the application for judicial review is granted. The decision of the Conservation Authority voiding he permit is quashed. The Conservation Authority is to pay costs of $100,000 all inclusive to the applicants for the original application and the application for judicial review.

Favreau J.

I agree _______________________________

McWatt A.C.J. S.C.J.

I agree _______________________________

Kristjanson J.

Released: January 26, 2022

CITATION: Rudyk v. Halton Region Conservation Authority, 2022 ONSC 518

DIVISIONAL COURT FILE NO.: 779/21